A limited constitutional government calls for a rules-based, freemarket monetary system, not the topsy-turvy fiat dollar that now exists under central banking. This issue of the Cato Journal examines the case for alternatives to central banking and the reforms needed to move toward free-market money.

The more widespread use of body cameras will make it easier for the American public to better understand how police officers do their jobs and under what circumstances they feel that it is necessary to resort to deadly force.

Americans are finally enjoying an improving economy after years of recession and slow growth. The unemployment rate is dropping, the economy is expanding, and public confidence is rising. Surely our economic crisis is behind us. Or is it? In Going for Broke: Deficits, Debt, and the Entitlement Crisis, Cato scholar Michael D. Tanner examines the growing national debt and its dire implications for our future and explains why a looming financial meltdown may be far worse than anyone expects.

The Cato Institute has released its 2014 Annual Report, which documents a dynamic year of growth and productivity. “Libertarianism is not just a framework for utopia,” Cato’s David Boaz writes in his book, The Libertarian Mind. “It is the indispensable framework for the future.” And as the new report demonstrates, the Cato Institute, thanks largely to the generosity of our Sponsors, is leading the charge to apply this framework across the policy spectrum.

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Tag: federalism

The infamous Conway attack on Rand Paul may be found here. Most people have focused on religion and politics in talking about the ad. I want to examine a part that has been overlooked.

We often hear that contemporary liberalism comprises a big state role in economic regulation combined with a small state regarding social and civil liberties. Maybe not.

Look at the disclaimer at the beginning of the ad. Who is standing behind Jack Conway? Those two gentlemen would police officers, probably Kentucky state police. Why are they there? After all, Conway could have put his loving wife and dear children in the background. But he choose police officers. Conway is saying: “I stand with the forces of order.” Not a very socially liberal message.

Why are the police willing to be in Conway’s ad? After all, the forces of order usually endorse the Republican candidate. Not this time. The Fraternal Order of Police in Kentucky endorsed Jack Conway. Why? Rand Paul suggested the drug war in Kentucky might be paid for in Kentucky. This had two effects. First, it cast doubt on the holiness of the anti-drug crusade. By putting the police officers behind him, Jack Conway is saying: “I will fight the drug war no matter what.” Not good for social liberalism or civil liberties.

Of course, the police have a material interest in the drug war in Kentucky. They believed that Dr. Paul’s call for federalism would mean lower salaries and less resources for the drug war in Kentucky. Conway is saying here: no budget cuts for my friends, the forces of order. Thus does the drug war bring the Kentucky State Police and the Daily Kos into a political alliance.

Like most politicians, Jack Conway is doing whatever is necessary to win a senate seat. He could end up as the pivotal vote for a Democratic Senate majority, at least in partisan matters.

If he votes as he ran, Conway will be a reliable vote for the policy status quo on the drug war, against civil and social liberties, and for a politics that always and everywhere covets victory “by any means necessary.” He should fit in well in Washington, especially with the more authoritarian parts of the GOP.

The federal government will step in to ensure that the Obama administration’s health care reforms are implemented in every state, Kathleen Sebelius, the health secretary, said, amid growing resistance to the changes in some parts of the US and an inability to act in others.

The way the bill is written, it really is a state-based programme with the federal government providing the back-up. So if a state opts not to set up a risk pool, we do it here at the department. If the state opts not to regulate their insurance market, we do it…

It is not a federal takeover, it’s really a partnership.

Yes, a partnership not unlike that between the Soviet Union and, say, Czechoslovakia.

The Obama administration has good reason to emphasize its conception of this “partnership:”

[S]ome big states, including California and Florida, said they did not have the legal authority to enforce the new consumer protection standards, while others face such severe budget crises that they will struggle to pay for provisions, such as the expanded Medicaid services for lower-income groups, required under the law….

Separately, more than 20 states are challenging a mandate that requires almost all Americans to have some form of insurance by 2014 as unconstitutional. A judge in Virginia has said a challenge brought by the state’s attorney-general can proceed, while Arizona, Florida and Oklahoma will soon follow in Missouri’s footsteps by holding yes-or-no referendums on the mandate….

“Federal/state relations is one of the biggest challenges to implementing healthcare reform,” said Diane Rowland, executive vice-president of the Kaiser Family Foundation, a non-partisan health policy group. “Many of the states are facing fiscal crises and they have real capacity issues.”

Sebelius is undeterred:

The legal challenges will work their way through…. It doesn’t slow anything down. This is the law of the land.

• The government having decided that Chrysler’s survival is an urgent national necessity, could it decide that Cash for Clunkers is too indirect a subsidy and instead mandate that people buy Chrysler products?

•If Congress concludes that ignorance has a substantial impact on interstate commerce, can it constitutionally require students to do three hours of homework nightly? If not, why not?

•Can you name a human endeavor that Congress cannot regulate on the pretense that the endeavor affects interstate commerce? If courts reflexively defer to that congressional pretense, in what sense do we have limited government?

•In Federalist 45, James Madison said: “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.” What did the Father of the Constitution not understand about the Constitution? Are you a Madisonian? Does the doctrine of enumerated powers impose any limits on the federal government? Can you cite some things that, because of that doctrine, the federal government has no constitutional power to do?

It is unfortunate that Will’s column did not make the hard copy of today’s Washington Post. (The column is dated today, but it’ll likely appear in his regular Sunday space.) Senators on the Judiciary Committee need to read this stuff.

So why do American libertarians think that federalism is consistent with their commitment to individual liberty? Why not, instead, support a strong national government that can suppress subnational trade wars and protect a robust set of national liberties? What’s the payoff, in terms of individual liberty, from protecting subnational jurisdictions’ exclusive jurisdiction over certain topics?

In other words, if government is bad, why do we want a multiplicity of governments – federal, state, local – all presumably restricting individual liberty in some way?

Well, with all due respect to Prof. Hills – who also graciously commended Cato’s brief in Comstock, in which we argue that that Congress cannot enact a civil commitment statute for sexual predators because there is no such enumerated power and it cannot be inferred from the Necessary & Proper Clause – his analysis erroneously assumes that libertarians (he specifically mentions Cato, our senior fellow Randy Barnett, and our adjunct scholar Ilya Somin) are results-oriented in our approach to constitutional interpretation. And we shouldn’t pursue federalism, he says, because it’s against our interests.

Both of these premises are flawed. I won’t go into much detail because Randy and (the other) Ilya have already provided reactions at the Volokh Conspiracy here and here, with which I agree. First , we like federalism because that’s the system the Constitution set up and luckily, the Constitution is, for the most part, a libertarian document. Second, the Framers set up the Constitution that way because the different levels of government would exist not to multiply power-hungry bureaucrats’ opportunities for mischief but precisely to disallow dangerous aggregations of power. So from the get-go there was no possibility of federal tyranny and, after the Fourteenth Amendment empowered Congress and federal courts to protect individual rights against state infringement, there was to be no state tyranny either.

And so, much as we like the strict limitations on Congress’s power – the express enumerations of Article I, section 8, the Commerce Clause, etc. – we also like the Due Process, Equal Protection, and Privileges or Immunities Clauses of the Fourteenth Amendment. There is thus no conflict between federalism as a structural constitutional provision that promotes liberty and other, “anti-federalist” provisions that also promote liberty. In practice that means there is no conflict between arguing that Obamacare exceeds the federal government’s authority while asking the Supreme Court to strike down Chicago’s handgun ban. The original meaning of the relevant constitutional provisions support both arguments – and both arguments enhance liberty!

It really is a remarkable document, this Constitution. Too bad its proper understanding has been lost.

Absolutely. It will be an uphill battle, because modern “constitutional law” is so far removed from the Constitution itself, but a win is not impossible. There are three main arguments. (1) Under the Constitution, as properly interpreted, Congress has no power to enact such a plan. (2) The plan conscripts state governments into carrying out and paying for federal mandates. And (3) the individual mandate amounts to an unlawful capitation or direct tax.

The first argument will almost certainly lose, because under post-1937 readings of the Commerce Clause, Congress can regulate anything that “affects” interstate commerce, which at some level is everything. Under modern “constitutional law,” that’s what we’ve come to – under the pressure of FDR’s infamous Court-packing scheme, a Constitution authorizing only limited government has been turned into one that authorizes effectively unlimited government.

The second argument has promise: In New York v. United States (1992) and Printz v. United States (1997) the Court held that the federal government could not dragoon state legislatures or executives into carrying out and paying for federal programs. Yet that is just what’s at issue here with the “exchanges” that states are required to establish. To be sure, the states can “opt out,” but as yesterday’s suit argues, with so many people already on the Medicaid rolls, that option is effectively foreclosed. Indeed, the new bill will force millions more on to the Medicaid rolls, which is one of the main reasons these states, already strapped by Medicaid expenditures, have brought suit. Florida alone estimates that the added costs will grow from $149 billion in 2014 to $938 billion in 2017 to over one trillion dollars by 2019.

The third argument holds the most promise. ObamaCare compels individuals to buy insurance from a private company (why stop there? why not cars from GM?), failing which they will be required to pay a tax (fine?). This is an unprecedented expansion of Congress’s power “to regulate interstate commerce.” But even if it were to pass the modern Commerce Clause test, the tax should fail because it’s not apportioned among the states in accordance with their population.

Let’s be clear, however. This suit was brought because the 13 states (and I predict more will follow) see the handwriting on the wall. ObamaCare will mark the effective end of federalism as we’ve known it, will bankrupt the states, and, because of that – here’s the clincher – is but a stalking horse for federal single-payer health care in America. This suit will keep the issue alive until November, when the American people will have a chance to weigh in.

1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.

2. As federal spending rises, it creates pressure to raise taxes now and in the future. Higher taxes reduce incentives for productive activities such as working, saving, investing, and starting businesses. Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance.

3. Muchfederal spending is wasteful and many federal programs are mismanaged. Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies. It’s true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy, and other market forces. We need to similarly weed out government failures.

4. Federal programs often benefit special interest groups while harming the broader interests of the general public. How is that possible in a democracy? The answer is that logrolling or horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters. One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs.

5. Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them. Programs usually distort markets and they sometimes cause social and environmental damage. Some examples are housing subsidies that helped to cause the financial crises, welfare programs that have created dependency, and farm subsidies that have harmed the environment.

6. The expansion of the federal government in recent decades runs counter to the American tradition of federalism. Federal functions should be “few and defined” in James Madison’s words, with most government activities left to the states. The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations.

The Economist’s Free Exchange blog asks: “[W]hy isn’t federal aid to states more popular, and popular enough to get through Congress, given that nearly every American lives in one?”

I would ask the blog’s author: How much more popular would he like it to be? As the following charts show, federal aid to state and local governments has catapulted to record levels.

As I’ve discussed elsewhere, Medicaid has been driving the growth in federal subsidies to state and local governments. But other areas, such as education, income security, and transportation, have also seen substantial increases.

Subsidizing state and local government is quite popular with federal, state, and local policymakers and associated special interests. It’s doubtful the average citizen is aware that so much of their state’s spending is derived from their federal tax dollars. However, I suspect that most folks (who aren’t on the take) would frown upon the concept of sending money to Washington only to have politicians send it back to the states via the federal bureaucracy. While there may be popular support for many of the state programs funded with federal dollars, citizens need to understand that federal subsidization of state and local government has fueled unhealthy government growth at all levels.